Friday, June 6, 2014

There have been a lot of changes in banking in the past few
years. Some changes are subtle, but some create a new paradigm, such as the
advent of Mobile Banking. Mobile Banking has the potential to be bigger than Online
Banking was at its introduction. Why? There is a much larger installed base of
mobile smart phones today, 1.5 billion worldwide, than there were PC’s in 1997
when Online Banking went live. Mobile Banking acceptance by younger adults is
off the charts. They do not fear using their phones for banking purposes and
welcome the convenience Mobile Banking promises them.

So, what are some of the big changes we will see coming in
the near future? For starters, it is a foregone conclusion that paper checks are
going away. With the proliferation of online bill pay systems, there is very
little need for consumers to sit at the old desk and write out checks once or
twice a month. You won’t have to lick any of those nasty bill envelopes
anymore! Yuck.

Today, it takes me five minutes to pay 7 bills. No stamps,
no envelopes, no calculators. Just me, my bills and my PC and my bills are paid
in 24-48 hours mostly. It is very easy even for beginners.

Another change will be the new EMV or EuroPay
MasterCard/Visa. This is the new “chipped” cards that many have been talking
about. Simply put, EMV (sometimes referred
to as chip-and-PIN, or chip-and-signature) is the most recent advancement in a
global initiative to combat fraud and protect sensitive payment data on cards.
A cardholder's confidential data is more secure on a chip-enabled payment card
than on a magnetic stripe (magstripe) card, as the EMV card supports dynamic
authentication, while the current mag-stripe card does not (the data is
static). Consequently, data from a traditional magstripe card can be easily
copied (skimmed) with a simple and inexpensive card reading device – enabling
criminals to reproduce counterfeit cards. Chip (EMV) technology is effective in
combating counterfeit fraud with its dynamic authentication capabilities
(dynamic values exist within the chip itself that, when verified by the
point-of-sale device, ensure the authenticity of the card).The one thing that cannot be copied is the chip in the card.(A lot of
people are saying that if we had EMV cards, the Target data breach would not
have happened. Incorrect. The EMV cards would not have protected anyone from
Target’s failed attempts at data security on their systems.)

We still see a lot of paper loan applications around today.
More and more, financial institutions are moving to paperless processes. Your
application is online and all the loan underwriting will be done on line. You
will sign with your electronic signature. Do you need to have paper copies of
disclosures in your files at home? No, not if you can access them on your
phone, tablet or PC whenever you wish. You can save a digital file of your
documents on the security of your home computer if needed.

Teller roles are changing and that means that your bank
will change as well over time. Some credit unions have installed video Tellers over the
past few years. There is one CU that is currently experimenting with a
holographic Teller. Tellers are now being trained to offer advice and show you
how to use the latest technology, whether it’s online banking, a mobile
application, or digital documents; the role of the teller is not what it used
to be.

Consider that there is already a lot of automation in
banking. Automatic Teller Machines, ATM’s, have become ubiquitous in our banks,
convenience stores, airports, and even gas stations. Many of today’s ATM’s will
give you a copy of the check you deposited for your records. Credit unions have
really changed the paradigm of the ATM as they “share” their ATM’s; meaning
that if I bank at Meriwest Credit Union, I can go to virtually any other CU’s
ATM, nationwide, and make a deposit to my account at Meriwest. Credit unions
have offered shared ATM’s for many years.

Other forms of automation are cash and coin counters.
Certain new ATM’s are being equipped with cash counters in them. You deposit
the cash in the slot and the machine counts and verifies your deposit. In most
of our branches, we offer our members a coin counter. They can dump their
accumulated coins in the machine; it counts them and gives them a receipt.
Today we take that receipt to a teller who will deposit the amount in our
checking account. In the near future, the coin counter will be connected to the
financial institution and deposit the coin directly to your account. That is,
if coins are still around.

It may be unbelievable, but actual physical money will make
an exit from our lives. The dollars and coins with which we grew up will no
longer be necessary to make transactions. All of our money will be digitally
managed. Today, unless we physically use cash, most of our transactions are now
digitally managed.

Your employer pays you by Direct Deposit. You go online and
pay your bills with online bill pay. You get a check in the mail for a rebate.
You use your Smart Phone to take a photograph of the check and use Remote
Deposit Capture to deposit it in your checking account. Your financial
institution never has a physical copy of the check, only digital. You walk to
the deli and buy a sandwich and a soda with your debit card. We drive across a
bridge and “beep,” our bridge tolls are paid automatically from our checking
account. We can pay our taxes electronically and receive our refunds in the
same manner.

I think it is easy to see the future is now and these
changes are coming faster than we think.

***

Our next Free
Financial Workshop:

Car Buying 101

Saturday, June 14, 2014 at 10 AM

Learn how plan, select, and make your
deal for your next new or used car. We will cover research, financing, and
explain how to save hundreds of dollars on vehicle warranties.